WASHINGTON (AP) -- Fewer Americans signed contracts to buy homes in December with affordability pressures causing interest from would-be buyers to fall.
The National Association of Realtors said Wednesday that its pending home sales index fell 2.2 percent last month to 99, its lowest reading since April 2014. The index based on contract signings has plunged 9.8 percent over the past 12 months.
Home sales declined in 2018 as the combination of higher mortgage rates, relatively low inventories and price gains consistently outpaced wage growth.
Average mortgage rates have dropped from recent highs of nearly 5 percent. It's unclear whether that will be enough to revitalize buyer demand because of a decrease in the sales listings of homes that median-income families can afford.
Existing-home sales in 2018 tumbled 3.1 percent from the previous year, to 5.34 million units, the worst showing since 2015. The outlook for homebuying was complicated in December by stock market self-offs and volatile changes in mortgage rates. Investors grappled with a slowdown in global economic growth.
The decline in sales has caused price gains in housing to weaken, yet it remains to be seen whether that will produce a rebound this year.
"Even though house price appreciation is still strong, it's been slowing," said Doug Duncan, chief economist at the mortgage loan company Fannie Mae. "You had volatility in markets and rates--and there is no question that there has been a response to that by homebuyers."
The pending sales index fell in the Northeast, Midwest and South in December. But contract signings increased in the West region, which is among the priciest in the country and has witnessed a severe decline in sales over the past year as a result.
Over the 12 months ended in December, the index declined in all four regions, including a 13.5 percent plunge in the South, which is generally the nation's fastest growing region for housing.
Pending sales are a barometer of home purchases that are completed a month or two later.